Three Physical Gold ETF Plays

The demand for shares of physically backed gold ETFs continues to climb as investors' concerns about declining purchasing power and inflation spur investment.

According to September data from the National Stock Exchange, SPDR Gold Shares(GLD Quote) is second only to SPDR 500(SPY Quote) when it comes to ETFs with the largest amount of assets.

SPDR finished September with more than $35 billion in assets. As of Oct. 23, State Street reports that there are now nearly $38 billion in assets in GLD.

While GLD may be the largest physical gold ETF, it is not the only U.S. ETF to be backed by physical gold holdings. iShares Comex Gold(IAU Quote) had $2.4 billion in assets at the end of September. According to the fund's Web site, IAU's assets were $2.55 billion as of Oct. 23.

ETF Securities, whose founder launched the first physically backed gold fund in Australia in 2003, has also grabbed a slice of the pie with its U.S. gold fund. The company's Physical Swiss Gold Shares(SGOL Quote) launched on Sept. 9, 2009, and has already attracted more than $201 million in assets as of Oct. 23.

Gold ETFs Shiny Future

All three funds have a similar structure and fee schedule. GLD and IAU both have management fees of 0.40%, while newcomer SGOL has a 0.39% fee. All three funds offer investors exposure to a physical stockpile of gold held for investors by the trust.

The biggest difference between the funds is size and where the gold is stored. GLD is the largest fund when measured by assets and also has the highest trading volume. GLD's three-month average daily trading volume is more than 12 million shares. IAU has a three-month average daily trading volume of 260,000 shares, while SGOL has an average daily trading volume of 100,000.